Main Menu

6 Tips on Small Business finance

As competition between business firms is on a constant rise, it has become more and more difficult to find capital for your small business. An organization’s access to more capital is a major discerning factor that separates it from the rest. Things have changed dramatically since the 2008 Global Depression and finance to small organizations is not that readily available as it used to. Read on for 6 Tips on Small Business finance.

Hence, there are several extra milers that business owners have to do in order to secure additional finance to expand their small businesses. This becomes even more difficult due to the lack of any performance history, which doesn’t work very well in the books of investors. If you are trying to elaborate your business and need extra capital, here are some tips that might be helpful in securing finance for your organization.

1. Personal Investment is the Key

You cannot hope to risk someone else’s investment, without risking your personal capital in the business. A finance partner will not show much interest unless they make sure that you have invested a significant amount of capital in the business. Nevertheless, it is almost impossible to get debt financing for a startup unless a valuable personal asset is kept as collateral. Try to maximize the amount of personal money invested in the business to stand a better chance of approval.

2. Be Specific about the Type of Finance You’re Looking For

While most of us know it already, it is common for people to be oblivious to the different types of finance models in the market. An applicant must be clear about the type of finance they require. Whether it is working capital finance or finance to buy new equipment, business owners must have a precise idea about the purpose and the amount of capital that is required.

3. Crowdfunding

One of the most popular ways to raise small capital in a small time is through Crowdfunding. The term Crowdfunding is a way to raise money through your social contacts like family, friends and others through the internet. Although, this is more of a short-term solution to your capital needs, it can definitely work when nothing else does. Sites like Kickstarter and FundRazr etc. can be accessed by people in order to raise some short term capital for their small projects and fresh startups.

4. Microloans

Even after you have invested a significant amount of capital, there might be a chance that financers might still not provide you with the capital you need. This might be due to the lack of any credit history and any prior experience. The best way to get an easy cash advance is by applying for a microloan. This is specifically for small businesses that need some additional working capital for their day to day expenses. The minimum amount for a microloan can be as low as $500 upto $35,000. Most microloan organizations have flexible and lenient criteria and don’t require a lot of documentation.

5. Clean Credit Record

It is already clear that investing in a new business is a risky affair for most financers and you do not want to ruin your chances by having a bad credit history. Most finance companies do a thorough background check on most investors and also check their credit scores. If the investors find too many discrepancies in your credit history and a low credit score, there are slim chances that they might invest in you. Keeping a good check on your credit scores and settling all the payments that might affect your history is always a good thing before seeking an investor.

6. Long-Term Planning

While there are countless ways of securing small finance, planning for long-term business is the key to success. Investors will often look at the longevity of your business plan rather than its uniqueness. Hence, determining the amount of capital needed based on your long term plans is always the best option.

Apart from these, there are several other ways like using your credit card and applying for a bank loan to get easy finance for your small organization. Nevertheless, it is always careful planning and limiting your expenses that will help secure additional capital for your business.

About Rohit Agarwal

Rohit Agarwal is an avid reader of several topics such as law, finance, management and healthcare. His keen eye for discovering new things makes him an expert on several subjects.

One Response to 6 Tips on Small Business finance

I think this one is quite contradictionary. Depending on what the actual investment is, its amount a of course, the most important factor – what the risk is, one may have to consider a loan. If your plane has been set up right, a third party should carry the financial risk.

About Small Business Can

The idea for Small Business Can comes from an Ulster Bank initiative when we went and talked to hundreds of businesspeople and asked them about the types of business supports they most valued. The majority said that they valued the insights of other businesspeople the most. We came up with smallbusinesscan.com, a site run by businesspeople for businesspeople. Read more...